Let’s make Maryland pro-business

The elections and a global recession prompted a lot of good discussion about what Maryland must do in order to retain and attract investment for jobs.

This summer the Maryland Chamber of Commerce, Greater Baltimore Committee, Maryland Association of CPAs, Technology Council of Maryland and 14 fellow business organizations collaborated on a project to help our elected officials do just that.

Because taxes do play an important role in an employer’s decision to locate or expand in any state, we commissioned a study by Ernst & Young to evaluate how Maryland’s tax system compared to several nearby states that are considered to be our competitors. The states evaluated were Pennsylvania, Virginia and North Carolina.

Rather than just look at general business, we asked E&Y to analyze taxes paid by three representative types of companies that are important to our economy, including a financial services corporation, a biotech manufacturing corporation and a smaller professional services business that is taxed as a pass-through entity. The analysis calculated the tax impact of a plant expansion or new investment for each type of company in the four states.

All types of business taxes resulting from the proposed business expansion were considered, including corporate income taxes, franchise taxes, individual income taxes for a pass-through entity, sales taxes on business inputs and property taxes.

The study’s findings demonstrate that Maryland has work to do in order to become more competitive with nearby states on business taxes:

○ In two of the three industries evaluated, Maryland’s business taxes were the highest among the four states considered.

○ Business taxes are 55 percent higher in Maryland for financial services companies than in Pennsylvania, the lowest-cost state in that category.

○ Business taxes on biotech manufacturing companies are 19 percent higher in Maryland than in Virginia, the lowest-cost state in that category.

○ Business taxes are 68 percent higher in Maryland for professional services pass-through companies than in Pennsylvania, the lowest-cost state in that category.

In our opinion, the study provides Gov. Martin O’Malley and the General Assembly with data that has not been calculated in recent memory.

What does this mean? In addressing the state’s ongoing budget gap, the governor and General Assembly must be mindful of the impact of business taxes on job investments.

If we truly want to improve Maryland’s competitiveness, we must avoid actions that would make Maryland less competitive with nearby states.

Let’s work together to ensure that high-paying jobs with good benefits do come to Maryland. Adding new taxes onto businesses as we struggle to come out of the recession would be counterproductive.